City may offer business loans

City may offer business loans

Oceanside  Oceanside would offer low-interest loans to businesses to help them open or stay in the city under a plan being developed by City Manager Peter Weiss and Economic Development Coordinator Tracey Bohlen.

The tentative proposal is to use $500,000 of a projected $1.3 million budget surplus this fiscal year to offer loans of up to $100,000 at interest rates below what businesses could get elsewhere, Weiss said.

“We’ve had a lot of smaller businesses wanting to come up and open or expand, and they’re running into financial problems,” Weiss said. He said the city loan program would give them the extra help they need to make it.

“We can attract business and keep them here for not a whole lot of money,” Weiss said.

Weiss and Bohlen will present the idea to the City Council on Feb. 27.

If the council gives the go-ahead, Bohlen said, city staffers would work out the details of the program with the goal of presenting a formal proposal to the council in March. If approved, the program could be up and running by the end of June.

The tentative plan is for the city to offer three categories of loans.

Micro loans of up to $30,000 would be offered to small businesses, such as restaurants, to help make building improvements or buy equipment.

“It could be used for new (stove) hoods or grease traps,” Bohlen said. “It will be for a range of business needs.”

Gap financing loans, probably up to $50,000, would be offered to businesses that need extra capital to back up bank financing they have for construction, Bohlen said.

“Sometimes they need extra collateral” to secure a bank construction loan, and the city would provide that to remove what could have been a fatal snag, Bohlen said.

Targeted tenant loans of up to $100,000 would be offered to building owners who want to upgrade their property to make it more attractive to biotech and high-technology companies, she said.

“We don’t have the quick and easy building space to move into if you need lab space or you need a small production area for clinical trials,” Bohlen said. “If they get approval from the FDA (Food and Drug Administration), they need it (space) yesterday.”

Those businesses now go to La Jolla or University City in San Diego, where such space is readily available, she said.

Bohlen said once it’s up and running, the loan program would be self-sustaining, with new loans offered as old ones are paid off.

“We’re looking at doing a competitive rate, probably prime plus 2.5 to 3 percent, which would be a lower rate than (businesses) could get on the market,” Bohlen said.

The loans could be for as short a period as five years or as long as 20 years, she said.

Mayor Jim Wood said he likes the idea, as does Councilman Jack Feller.

“If we have the ability and the money to help companies that need a little assistance, that’s something I’d be willing to look at,” Wood said.

Feller, who once owned a sandwich shop, said a low-interest city loan might be just what a small business needs to get going.

“I’ve always been in favor of incentivizing small businesses to come here,” Feller said. “It’s another tool in the toolbox. I’m all for it.”

The proposal was greeted enthusiastically by business leaders.

“It’s a great idea. It seems to me it might go a long way in developing a win-win program for the city and the business community,” said Oceanside Chamber of Commerce President David Nydegger.

“Of course, I’m concerned about oversight. We want to make sure the money is properly controlled and the people we’re lending the money to have the resources to make it happen,” Nydegger said.

“Just the very idea of the city jumping in to try to jump-start the economy with a kind of loan program, that’s pretty innovative,” said Wright, whose organization promotes downtown businesses.

Wright said the loan program would be especially helpful for people who want to open restaurants or cafes downtown because some of the older buildings need a lot of work to meet modern health and safety codes.

“Many of our downtown storefronts are not set up for restaurants,” Wright said.

Renovating old storefronts can be “pretty cost-prohibitive,” Wright said. “If the city maybe could supplement with a low-interest loan, that might really jump-start the downtown development we’ve been looking for.”